Sizable Early Benchmark Index Gains Fade Through Day

MNI (London) - Chinese equities opened sharply higher, drawing support from the weekend action from policymakers. Equity-supportive measures implemented included:

• Cutting the stock trading levy to 0.05% from 0.1%. The first such move since 2008 (touted last week).
• Limiting IPOS.
• Looser margin financing requirements.
• 17 new ETF products approved at the end of last week.
• At the index level the CSI 300 finished ~1.2% firmer on the day, giving back a chunk of its early 5+% gains.
• The lack of ability for the index to hold the move higher, even as policymakers unveil equity market-specific support, is telling when it comes to the degree of pessimism surrounding the Chinese economy.
• The WSJ ran a piece over the weekend noting that “Communist Party Priorities Complicate Plans to Revive China’s Economy” (click for full story)
• The benchmark index printed at the highest level since 11 August around the open, showing above 3,900, before falling back into last week’s range.
• Onshore brokerage stocks fared well on the above news, even after major names in the space lowered commission margins last week.
• Offshore investors shed CNY8.2bn of mainland equities via the HK-China Stock Connect links.